Recession Vs. Inflation: Must There Be a Winner?

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I don't think so

"...which is more important? Creating jobs for more people? Or is it more important to increase the value of people's savings and induce foreign investment? If it's the first, allow a little more inflation. If it is the latter, fight inflation and weather slower job growth. At some point, the Fed will have to choose."

Chris, you seem to imply that job growth and low inflation are mutually exclusive. What you are refering to is the Phillips Curve. This theoretical relationship has been debunked by many economists, most notably Milton Friedman. There is no trade off between low inflation and increased job growth. Gather from that what you will, but to me that makes the potential flaring up of inflation to be the preeminent problem facing Bernanke and The Fed.

Ryan of OH @ Aug 17, 2008 20:01:39 PM

Put it this way...

...which is more important? Creating jobs for more people? Or is it more important to increase the value of people's savings and induce foreign investment? If it's the first, allow a little more inflation. If it is the latter, fight inflation and weather slower job growth. At some point, the Fed will have to choose.

"Yes, Bernanke is a "political" appointee, and yes, he is acting only to make Republicans look good for the remainder of Bush's term."

Whoever you are, Bernanke will also serve after Bush leaves. The Fed handles monetary policy for the United States, not just for what political party that is in power.

Chris of AZ @ Aug 15, 2008 13:46:05 PM

If headline inflation is over 5% and Fed Funds are at 2% (while they bail out Bear Stearns), the most conservative people in America (the older bank CD savers) are being betrayed by their (supposedly) "conservative" politicians. Yes, Bernanke is a "political" appointee, and yes, he is acting only to make Republicans look good for the remainder of Bush's term.

If we have oil at very high prices because we cannot or will not bar non-producer, non-user, highly-leveraged speculators from the oil market, we are being badly served by our (supposedly) "conservative" politicians.

If the national debt doubles under a (supposedly) "conservative" president who started unpaid-for wars and cut taxes for those who could welll have afforded to pay them, you were "had".

of @ Aug 15, 2008 12:36:36 PM

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Capital Commerce

U.S. News business reporter Matthew Bandyk examines the issues, people, and debates that shape the nexus of political and economic life in the nation's capital.

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